LB LandBridge Company LLC

Fourth Quarter ResultsEarnings per share for the 13-week fourth quarter ended Feb. 2, 2019, were $1.94 compared to $2.33 for the 14-week quarter ended Feb. 3, 2018.  Thirteen-week fourth quarter operating income was $799.4 million compared to $986.6 million for the 14-week period last year, and 13-week net income was $540.1 million compared to $664.1 million for the 14-week period last year.

Reported results above include certain significant items as follows:

In 2018:

• A pre-tax charge, principally non-cash, related to the sale of La Senza of $99.2 million, or $0.20 per share. 

In 2017 (totaling to a net benefit of $0.22 per share):

• A pre-tax charge of $45.0 million, or $0.10 per share, related to a loss on the early extinguishment of debt;
• A tax benefit of $92.2 million, or $0.32 per share, related to new U.S. tax legislation.

Excluding these items, adjusted 13-week fourth quarter operating income was $898.7 million compared to $986.6 million for the 14-week period last year; 13-week net income was $595.2 million compared to $600.6 million for the 14-week period last year; and 13-week adjusted earnings per share were $2.14 compared to $2.11 for the 14-week period last year.

Net sales were $4.852 billion for the 13-week fourth quarter ended Feb. 2, 2019, compared to $4.823 billion for the 14 weeks ended Feb. 3, 2018.  Comparable sales for the 13-week fourth quarter ended Feb. 2, 2019, increased 3 percent compared to the 13 weeks ended Feb. 3, 2018. 

Full-Year ResultsEarnings per share for the 52-week year ended Feb. 2, 2019, were $2.31 compared to $3.42 for the 53-week year ended Feb. 3, 2018. Fifty-two week full-year operating income was $1.237 billion compared to $1.728 billion for the 53-week period last year, and 52-week net income was $643.9 million compared to $983.0 million for the 53-week period last year. 

Excluding significant items, adjusted 52-week full-year earnings per share were $2.82 compared to $3.20 for the 53-week period last year; 52-week adjusted operating income was $1.437 billion compared to $1.728 billion for the 53-week period last year; and 52-week adjusted net income was $786.7 million compared to $919.5 million for the 53-week period last year.  

At the conclusion of this press release is a reconciliation of reported-to-adjusted results, including a description of the significant items.

Net sales were $13.237 billion for the 52-week year ended Feb. 2, 2019, compared to $12.632 billion for the 53 weeks ended Feb. 3, 2018. Comparable sales for the 52 weeks ended Feb. 2, 2019, increased 3 percent compared to the 52 weeks ended Feb. 3, 2018. 

2019 OutlookThe company currently expects 2019 full-year earnings per share to be between $2.20 and $2.60, including an approximately breakeven earnings per share result in the first quarter. 

Earnings Call and Additional InformationAdditional fourth quarter financial information, including management commentary, is currently available at www.LB.com. L Brands will conduct its fourth quarter earnings call at 9:00 a.m. Eastern on Feb. 28.  To listen, call 1-866-363-4673 (international dial-in number: 1-973-200-3978); conference ID 3398756.  For an audio replay, call 1-855-859-2056 (international replay number: 1-404-537-3406); conference ID 3398756 or log onto www.LB.com. 

ABOUT L BRANDS:L Brands, through Victoria’s Secret, PINK and Bath & Body Works, is an international company.  The company operates 2,943 company-owned specialty stores in the United States, Canada, the United Kingdom and Greater China, and its brands are also sold in more than 650 franchised locations worldwide.  The company’s products are also available online at www.VictoriasSecret.com and www.BathandBodyWorks.com.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

We caution that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained in this press release or the fourth quarter earnings call or made by our company or our management involve risks and uncertainties and are subject to change based on various factors, many of which are beyond our control. Accordingly, our future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. Words such as “estimate,” “project,” “plan,” “believe,” “expect,” “anticipate,” “intend,” “planned,” “potential” and any similar expressions may identify forward-looking statements. Risks associated with the following factors, among others, in some cases have affected and in the future could affect our financial performance and actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements included in this press release or the fourth quarter earnings call or otherwise made by our company or our management:

• general economic conditions, consumer confidence, consumer spending patterns and market disruptions including severe weather conditions, natural disasters, health hazards, terrorist activities, financial crises, political crises or other major events, or the prospect of these events;
• the seasonality of our business;
• the dependence on mall traffic and the availability of suitable store locations on appropriate terms;
• our ability to grow through new store openings and existing store remodels and expansions;
• our ability to successfully expand internationally and related risks;
• our independent franchise, license and wholesale partners;
• our direct channel businesses;
• our ability to protect our reputation and our brand images;
• our ability to attract customers with marketing, advertising and promotional programs;
• our ability to protect our trade names, trademarks and patents;
• the highly competitive nature of the retail industry and the segments in which we operate;
• consumer acceptance of our products and our ability to manage the life cycle of our brands, keep up with fashion trends, develop new merchandise and launch new product lines successfully;
• our ability to source, distribute and sell goods and materials on a global basis, including risks related to:

• • political instability, significant health hazards, environmental hazards or natural disasters;
  • duties, taxes and other charges;
  • legal and regulatory matters;
  • volatility in currency exchange rates;
  • local business practices and political issues;
  • potential delays or disruptions in shipping and transportation and related pricing impacts;
  • disruption due to labor disputes; and
  • changing expectations regarding product safety due to new legislation;

• our geographic concentration of vendor and distribution facilities in central Ohio;
• fluctuations in foreign currency exchange rates;
• stock price volatility;
• our ability to pay dividends and related effects;
• our ability to maintain our credit rating;
• our ability to service or refinance our debt;
• our ability to retain key personnel;
• our ability to attract, develop and retain qualified associates and manage labor-related costs;
• the ability of our vendors to deliver products in a timely manner, meet quality standards and comply with applicable laws and regulations;
• fluctuations in product input costs;
• our ability to adequately protect our assets from loss and theft;
• fluctuations in energy costs;
• increases in the costs of mailing, paper and printing;
• claims arising from our self-insurance;
• our ability to implement and maintain information technology systems and to protect associated data;
• our ability to maintain the security of customer, associate, third-party or company information;
• our ability to comply with regulatory requirements;
• legal and compliance matters; and
• tax, trade and other regulatory matters.

We are not under any obligation and do not intend to make publicly available any update or other revisions to any of the forward-looking statements contained in this press release or the fourth quarter earnings call to reflect circumstances existing after the date of this press release or to reflect the occurrence of future events even if experience or future events make it clear that any expected results expressed or implied by those forward-looking statements will not be realized. Additional information regarding these and other factors can be found in Item 1A. Risk Factors in our 2017 Annual Report on Form 10-K.

For further information, please contact:                                         L Brands:Investor Relations           Media RelationsAmie Preston                  Tammy Roberts Myers(614) 415-6704               (614) 415-7072apreston@lb.com            communications@lb.com                                                                                                                                          

L BRANDSFOURTH QUARTER 2018

Comparable Sales Increase (Decrease) (Stores and Direct):

1 – Results include company-owned stores in the U.S. and Canada and direct sales.2 – Results include company-owned stores in the U.S., Canada, the U.K. and Greater China and direct sales.

Comparable Sales Increase (Decrease) (Stores Only):

1 – Results include company-owned stores in the U.S. and Canada.2 – Results include company-owned stores in the U.S., Canada, the U.K. and Greater China.

Total Sales (Millions):

1 – Results include company-owned stores in the U.S. and Canada.2 – Results include retail sales from company-owned stores outside of the U.S. and Canada, royalties associated with franchised stores and wholesale sales.

Total Company-Owned Stores:

1 – Business was sold to an affiliate of Regent LP on Jan. 6, 2019.

Total Noncompany-Owned Stores:

1 – Business was sold to an affiliate of Regent LP on Jan. 6, 2019.

L BRANDS, INC. AND SUBSIDIARIESNOTES TO RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES(Unaudited)

The “Adjusted Financial Information” provided in the attached reflects the following non-GAAP financial measures:

Fiscal 2018

In the fourth quarter of 2018, adjusted results exclude the following:

• A $99.2 million ($55.1 million net of tax of $44.1 million) loss on the sale of La Senza to an affiliate of Regent LP.

In the third quarter of 2018, adjusted results exclude the following:

• An $80.9 million charge ($72.7 million net of tax of $8.2 million), included in buying and occupancy expenses, related to the impairment of certain Victoria’s Secret store assets. 
• $20.3 million ($15.0 million net of tax of $5.3 million) of Henri Bendel closure costs, included in buying and occupancy expenses ($13.8 million) and general, administrative and store operating expenses ($6.5 million).

In the first and second quarter of 2018, there were no adjustments to results.

Fiscal 2017

In the fourth quarter of 2017, adjusted results exclude the following:

• A $45.0 million pre-tax loss ($28.8 million net of tax of $16.2 million), included in other income (loss), associated with the early extinguishment of our June 2019 notes.   
• A $92.2 million tax benefit related to changes in U.S. tax legislation.

In the first, second and third quarters of 2017, there were no adjustments to results.

The Adjusted Financial Information should not be construed as an alternative to the reported results determined in accordance with generally accepted accounting principles.  Further, the Company’s definition of adjusted income information may differ from similarly titled measures used by other companies.  Management believes that the presentation of adjusted financial information provides additional information to investors to facilitate the comparison of past and present operations.  While it is not possible to predict future results, management believes the adjusted information is useful for the assessment of the ongoing operations of the Company because the adjusted items are not indicative of our ongoing operations due to their size and nature. Additionally, management uses adjusted financial information as key performance measures of results of operations for the purpose of evaluating performance internally.  The Adjusted Financial Information should be read in conjunction with the Company’s historical financial statements and notes thereto contained in the Company’s quarterly reports on Form 10-Q and annual report on Form 10-K.

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